THE SITUATION: You are a Research Analyst working for a top portfolio management firm, "UMUC Portfolio Management" (in no way affiliated with the University of Maryland University College). A high-net-worth client has approached your firm with the objective of finding an analyst qualified to manage their large portfolio. Your firm has selected several of its analysts to develop test portfolios in order identify the best person to manage the portfolio of this rich client. You have been selected by your firm to develop a 5-week trial portfolio to present to the client (and class). Because of the importance of this client (and their potentially large investment) your fee for demonstrating superior portfolio selection and management skill will be substantial. The analyst with the best report will become the portfolio manager for this high-net-worth client's portfolio (valued at over $100 million). Your portfolio management report and presentation will be submitted directly to your firm's high-net-worth client with the approval of your firm's Board of Directors. The success of your recommendations will determine the success of your firm in landing this large investor. (It is expected that your portfolio recommendations will not be the same as those reached by other analysts). You should do a market wide financial evaluation to determine the current situation, best investment course, appropriate asset allocation for this important client.

USE THE P2- INITIAL PORTOLFIO ASSIGNMENT FOLDER FOR ALL WEEK TWO DELIVERABLES

STEP ONE: Using the policy and strategy detailed in Homework #1 select securities for your portfolio. (The short-term demonstration Porfolio has $100,000.00.) Please keep in mind that you do not have the luxury of trading or selling and/or buying securities during your portfolio holding period.

After you determine your initial portfolio you must buy the portfolio using the HYPERLINK "http://www.cboe.com/tradtool/virtualtrade.aspx" CBOE Virtual Trade Tool ( HYPERLINK "http://www.cboe.com/tradtool/virtualtrade.aspx" http://www.cboe.com/tradtool/virtualtrade.aspx). The commission costs per trade (using CBOE Virtual Trade) are $9.95/trade for stocks and ETFs and $14.95/trade for options.

The securities you select for your portfolio can be selected from any traded securities that are available on CBOE Virtual Trading. (Exception!you may not invest in mutual funds, bond funds or the S&P 500 market index)

To start your Initial Portfolio, spend $100,000 to purchase a Portfolio of five Common Stocks and / or ETFs at the beginning of Week 2

STEP TWO: The assignment for the second week is to make your first Portfolio purchases using the CBOE Virtual Trade Tool ( HYPERLINK "http://www.cboe.com/tradtool/virtualtrade.aspx" http://www.cboe.com/tradtool/virtualtrade.aspx). What did you purchase and how does it relate to the investment policies and strategies you developed for Homework #1? Did you modify the investment policies and strategies? If you changed your investment policies and procedures what exactly did you update? If you revised your investment strategies did you inform the client?

Please submit your Homework #2 in MS Word format with the following file name: LastNameFirstInitial_Homework02.docx. For example, if you name is John Smith, the file name of your Answer Sheet should be SmithJ_Homework02.docx.

Your securities purchase strategy should be 1-2 pages (300-600 words), with at least three references. By the due date, submit Homework #2 to your Homework #2 Assignment Folder.

STEP THREE: Complete your P2- Initial Portfolio Homework Assignment by summarizing your P1- Investment Policy Statement and provide a short description of what you purchased and why. Next submit your completed P2- Initial Portfolio Homework Assignment in your P2-Initial Portfolio Assignment Folder.

Note: In a separate file, you can use an MS Excel spreadsheet to track your purchases.

ADDITIONAL INFORMATION

Video

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